Private shares
December 2024
- Artificial intelligence represents the most transformational investment opportunity since the internet
- Higher volatility underscores the importance of diversification with private market assets that are less correlated
- Any market dislocations will further extend the opportunity to optimise capital deployment
1. What do you think could be the biggest challenge or opportunity for clients in 2025?
Prolonged geopolitical uncertainty and macroeconomic headwinds could potentially result in higher volatility and less predictable market behaviour as we head into 2025. We believe this underscores the importance of implementing proper portfolio construction diversification with private market assets that are less correlated.
As investment managers like ourselves offer private market strategies with greater investor accessibility, we believe clients can more readily achieve proper diversification beyond traditional listed equities and fixed income products into key growth areas like late-stage private innovation companies.
2. What do you see as the one major investment opportunity for you in 2025 and how can you capitalise on it?
While we continue seeing private companies driving significant innovation and disruption across the global economy, we believe artificial intelligence (AI) represents the most transformational investment opportunity since the internet. That said, we would caution investors to exhibit discipline as this will be a multi-year investment opportunity and likely entail some ‘hype’ along the way.
At present, we believe the most attractive area for investment involves AI-enablers such as semiconductor equipment manufacturers, data centres, cloud providers and energy/utilities. AI-adopters will likely drive the next wave of valuation creation with significant productivity gains through utilisation of software and applications.
We will continue leveraging our extensive network throughout the private innovation ecosystem to identify and access what we view as category leaders driving this AI transformation.
3. What is the biggest risk to your asset class next year and how can you mitigate that risk, or even turn it into an advantage?
US-listed markets are trading at historic highs, however most of these gains have been driven by a small number of mega-cap companies as opposed to a broad market rally. This dynamic has created valuation gaps involving small and mid-cap growth companies and their peers in private markets, particularly late-stage growth companies like the ones we focus on, which we believe represents significant embedded value.
We have witnessed improving valuation activity across our portfolios over the past few quarters and expect this trend to continue into 2025; any market dislocations will further extend the opportunity to optimise what has been an extremely investor friendly environment for capital deployment.
Christian Munafo, Chief Investment Officer of Liberty Street Advisors, Inc., manages the Private Shares strategy for GAM Investments.
Important disclosures and information
The information contained herein is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained herein may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information contained herein. Past performance is no indicator of current or future trends. The mentioned financial instruments are provided for illustrative purposes only and shall not be considered as a direct offering, investment recommendation or investment advice or an invitation to invest in any GAM product or strategy. Reference to a security is not a recommendation to buy or sell that security. The securities listed were selected from the universe of securities covered by the portfolio managers to assist the reader in better understanding the themes presented. The securities included are not necessarily held by any portfolio nor represent any recommendations by the portfolio managers nor a guarantee that objectives will be realized.
This material contains forward-looking statements relating to the objectives, opportunities, and the future performance of the U.S. market generally. Forward-looking statements may be identified by the use of such words as; “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of any particular investment strategy. All are subject to various factors, including, but not limited to general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting a portfolio’s operations that could cause actual results to differ materially from projected results. Such statements are forward-looking in nature and involve a number of known and unknown risks, uncertainties and other factors, and accordingly, actual results may differ materially from those reflected or contemplated in such forward-looking statements. Prospective investors are cautioned not to place undue reliance on any forward-looking statements or examples. None of GAM or any of its affiliates or principals nor any other individual or entity assumes any obligation to update any forward-looking statements as a result of new information, subsequent events or any other circumstances. All statements made herein speak only as of the date that they were made.
The information contained herein is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained herein may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information contained herein. Past performance is no indicator of current or future trends. The mentioned financial instruments are provided for illustrative purposes only and shall not be considered as a direct offering, investment recommendation or investment advice or an invitation to invest in any GAM product or strategy. Reference to a security is not a recommendation to buy or sell that security. The securities listed were selected from the universe of securities covered by the portfolio managers to assist the reader in better understanding the themes presented. The securities included are not necessarily held by any portfolio nor represent any recommendations by the portfolio managers nor a guarantee that objectives will be realized.
This material contains forward-looking statements relating to the objectives, opportunities, and the future performance of the U.S. market generally. Forward-looking statements may be identified by the use of such words as; “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of any particular investment strategy. All are subject to various factors, including, but not limited to general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting a portfolio’s operations that could cause actual results to differ materially from projected results. Such statements are forward-looking in nature and involve a number of known and unknown risks, uncertainties and other factors, and accordingly, actual results may differ materially from those reflected or contemplated in such forward-looking statements. Prospective investors are cautioned not to place undue reliance on any forward-looking statements or examples. None of GAM or any of its affiliates or principals nor any other individual or entity assumes any obligation to update any forward-looking statements as a result of new information, subsequent events or any other circumstances. All statements made herein speak only as of the date that they were made.